Sears explores bankruptcy filing even as CEO scrambles to avoid it

Daniel Fowler
October 11, 2018

The Wall Street Journal reported late Tuesday that Sears hired boutique advisory firm M-III Partners LLC to help prepare a bankruptcy filing before a $134 million debt payment comes due on Monday, citing people familiar with the matter. The company is also talking to lenders about providing it with debtor-in-possession financing, CNBC reported.

Negotiations between Sears Chief Executive Eddie Lampert and Sears' special board committee are at a standstill over the committee's refusal to approve Lampert's rescue plan, the sources said. Sears' borrowings totaled $5 billion as of August 4.

The handwriting is on the wall: Sears appears to be nearing bankruptcy.

Sears newest store in the Dallas area opened in 2000 at Frisco's Stonebriar Centre but most Sears stores are in the region are in older regional malls that were built in the 1970s and 1980s: Southwest Center Mall in Dallas, Town East Mall in Mesquite, Irving Mall, Collin Creek Mall in Richardson, Vista Ridge Mall in Lewisville, Richardson Square in Richardson, The Parks at Arlington, Hulen Mall in Fort Worth and North East Mall in Hurst. Lampert's strategy has often involved keeping Sears afloat with loans.

Lampert has invested and lent to Sears many times over the years, making him and his hedge fund the company's largest shareholders with a stake just shy of 50 percent, as well as its biggest creditor, with about $2.5 billion owed to him or funds he controls.

Matt Kopsky, an analyst at Edward Jones, noted that Sears has not turned a profit since 2010 and that it has already sold off a majority of its brands, including Craftsman tools.

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Where we were: Sears's struggles are nothing new, and have been an overhang for some real estate owners. That kind of liquidation would be especially hard for lower-tier malls and shopping centers hard-pressed to find tenants in low-demand areas. In just the last few years RadioShack, Toys "R" Us and Sports Authority have all followed the path to the retailer graveyard.

J.C. Penney's former CEO Marvin Ellison in 2016 positioned the Plano-based retailer to win shoppers from Sears as it closed stores by adding kitchen and laundry appliances to stores.

"This has been the slowest moving train wreck happening for literally years", Perkins added.

Sears was at one point America's largest retailer and its largest employer.

"It's sad, it's really sad to see the end of an era", Perkins said.

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